Will Your Homeowner’s Insurance Protect You? You Would Be Surprised

WARNING: MEDICAL MARIJUANA PATIENTS AND CAREGIVERS! THIS MAY BE THE MOST IMPORTANT BLOG POST THAT YOU’LL EVER RECEIVE!

Your homeowners insurance policy MAY not cover property damage in your home if you are growing, cultivating and/or engaging in the manufacture of medical marijuana. Read on:

Nearly everyone has a homeowner’s insurance policy. The insurance policy covers the homeowner for damage and destruction to his/her property and home in the event of an accidental injury or loss. A typical police contains coverage language that looks like this:

A typical policy has exclusions as well. The exclusions language typically reads like this:

The insurance policy excludes from coverage any and all property damage resulting directly or indirectly from any of the following. Such a loss is excluded even if another peril or event contributed concurrently or in sequence to cause the loss.

Additionally, and most importantly, the policy excludes the following:

Increased Hazard: meaning any loss occurring while hazard is increased by a means within the control of an insured.

Most policies define the insured as the policy holder, spouse and any relatives or dependents under the age of 21 who lived at the residence premises.

This is the typical language of a homeowner’s policy. I can already hear people wondering, “but wait, growing marijuana in Michigan is legal and if something happens with my lights, chemicals or other materials, it will be an accident and I’ll be covered.” I can see the gears turning and people thinking that they are covered. Think again.

In Nationwide v McDermott, a case that was filed in the United States District Court for the Eastern District, this very defense to covering damage to fire loss at a home was excluded due to the increased hazard provision proved successful. Nationwide also argued that it was liable for the damages and loss because the insured’s conduct in using butane to manufacture marijuana oil was intentional and thus not accidental. The Hon. Thomas Ludington, a federal judge in that court, bought both arguments and granted a motion to dismiss filed by Nationwide Insurance in which the company argued that the occupants and insureds, by making butane honey oil, created an increased hazard that was not an accident: the underlying conduct, i.e., using butane, was intentional and the occupants knew that it was dangerous. Judge Ludington ruled that the damages were not covered by the insurance policy.

Some are undoubtedly saying, “but Neil, they were using Butane, I’m just growing marijuana.” As Lee Corso of Gameday fame states, “not so fast, my friend.” Many of the products that are used in manufacturing, growing and cultivating marijuana have warnings about fire hazards, e.g., lights, chemicals, electrical cords, plugs, outlets, surge protectors, etc. An insurance company like Nationwide could and I anticipate will make the argument that since the manufacture of marijuana is intentional, any fire that results from the intentional use of products is not “accidental.” Judge Ludington agreed with this reasoning. Moreover, I anticipate that insurance companies will argue that growing marijuana, i.e., the use of lights, etc. with warnings, is an Increased Hazard and thus any damage that results is not covered either. Judge Ludington agreed with this as well.

This post and warning is not meant to scare medical marijuana patients and caregivers. Quite the contrary, I offer it to give you necessary information. As a criminal defense trial lawyer, one who is the trenches everyday fighting the government on a wide variety of cases, I have witnessed the false sense of security experienced by many medical marijuana patients and caregivers. Many believed that their troubles were over when the Initiative passed. Many believed that they were going to be protected when the Medical Marijuana Act was enacted. Many thought the courts would protect them. Sadly, time and time again, medical marijuana patients and caregivers believed that they were protected when they weren’t. Rockind Law does not want that to happen again.

1 Comment

Neil can I or should I tell my insurance company that I am growing in my house. Not making BHO just growing. Thanks for any information just want to protect my home and thats why I pay for house insurance.